Why There Won’t Be a Debt Ceiling Crisis in December

Mitch McConnell says Democrats won't have the leverage they think. By Yuval Rosenberg and Michael Rainey Why There Won’t Be a Debt Ceiling Crisis in December A lot of Republicans griped last week that President Trump’s [deal with Democrats]( to suspend the debt ceiling and fund the government through December 8 gave Chuck Schumer and Nancy Pelosi everything they wanted while setting up a big fiscal cliff showdown in early December, much to the Democrats’ advantage. But Sen. Mitch McConnell isn’t buying that line of analysis. “Let’s put it this way. The deal is not quite as good as my counterpart thought it was,” McConnell [told The New York Times]( Monday. What the critics have failed to realize, McConnell said, was that the agreement that was passed ensures that the Treasury Department can use “extraordinary measures” to keep paying the country’s bills after December 8, and that those measures will push any potential debt crisis into next year. The result — and the reason McConnell is so sanguine about the situation — is the Democrats will have less leverage in December as Congress debates funding the government for 2018. Unable to combine the threat of a debt ceiling-driven default with the possibility of a government shutdown, Democrats may be less likely to get their way on other key issues, such as health care reform and changes to the immigration system. McConnell is right about the debt ceiling. Last week, Shai Akabas of the Bipartisan Policy Center, referring to the “X Date” when the Treasury could bump into the debt ceiling, [tweeted]( “Too early to make a formal estimate, but BPC's back of the envelope calculations have next debt limit ‘X Date’ in March 2018.” In a conference call with reporters Tuesday, Schumer warned that McConnell’s strategy would hurt the GOP by forcing two contentious votes. "If they used extraordinary measures to extend the debt ceiling,” [Schumer said]( “there would be two cliffs instead of one." And McConnell will need the votes of at least eight Senate Democrats to pass both a government spending bill and a debt ceiling increase. [Share]( [Tweet]( [Forward]( Mnuchin: Tax Cuts Could Be Backdated, 15 Corporate Rate Might Not Be Possible Speaking at the Delivering Alpha conference, hosted by CNBC and Institutional Investor, Treasury Secretary Steven Mnuchin made several [noteworthy comments]( about the White House's current approach to tax reform: The administration still wants tax reform to happen quickly, before the end of the year. - Tax reform may be backdated to apply to the current year. Mnuchin claimed this would “be a big boon for the economy.” - President Trump’s target of 15 percent for the top corporate tax rate will be hard to hit: "I don't know if we'll be able to achieve that given the budget issues. But we're going to get this down to a very competitive level." - The administration still wants to eliminate most deductions, including those for state and local taxes. Mnuchin said that he hopes the reduction in federal rates makes up for the loss of those deductions. - The administration still wants permanent tax reform, but will accept temporary changes if it has to. Mnuchin said, “Permanent is better than temporary, and temporary is better than nothing.” - Not all businesses will qualify for lower pass-through rates. “If you’re an accountant firm and that’s clearly income, you’ll be taxed an income rate, you won’t be taxed a pass-through rate. If you’re a business that’s creating manufacturing jobs, you’re going to get the benefit of that rate because that’s go[ing] to be passed through to help create jobs and better wages.” Mnuchin said, according to [The Wall Street Journal](. - Hedge funds will lose the carried-interest tax break. [Share]( [Tweet]( [Forward]( Chart of the Day The Census Bureau's annual reports on income, poverty and health insurance were released today. The key stats you need to know: Number of the Day: 26.1 Million Social Security kept more than 26 million people out of poverty last year, according to [the new Census Bureau reports](. Refundable tax credits such as the one for earned income kept 8.2 million people out of poverty, while food stamps lifted 3.6 million above the line, housing subsidies reduced the number of poor people by 3.1 million and unemployment insurance kept 680,000 out of poverty. Overall, the Census Bureau reported, the poverty rate was 12.7 percent, while a more sophisticated alternative measure that factors in government programs for low-income families put the rate at 13.9 percent, down from 14.5 percent in 2015. Read more about the new Census Bureau numbers [here](. [Share]( [Tweet]( [Forward]( Fiscal Flashes Tax Reform on the Menu: The president is set to host three moderate Democratic senators for dinner on Tuesday as part of his push for tax reform. The Democrats on the guest list: Sens. Joe Manchin of West Virginia, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, all of whom are up for reelection in 2018 in states Trump won last November. Vice President Mike Pence and GOP Sens. Orrin Hatch of Utah, John Thune of South Dakota and Pat Toomey of Pennsylvania are also slated to attend. ([Politico]( Big US Companies Want Permanent Tax Reform: The American Made Coalition, composed of more than 30 major corporations, wants to make sure that any business tax cuts Congress produces are done on a permanent basis. Temporary cuts won’t do the job: “Few businesses will make significant new investments if these changes are set to expire,” the coalition says in a letter being sent to lawmakers working on tax reform. The companies in the coalition include Boeing, Dow Chemical, General Electric, Eli Lilly, Oracle and Raytheon. ([Washington Post]( Dems Say Estate Tax Repeal Would Be ‘Absurd’: President Trump wants to repeal the estate tax – often referred to as the “death tax” in Republican circles. Leading Senate Democrats expressed their opposition to such a move today, arguing that the repealing the tax “abandons progressivity” in the tax code while handing just a few thousand wealthy families a huge tax break. “This is a totally absurd proposal,” said Sen. Bernie Sanders, an independent who joined Sens. Chuck Schumer and Ron Wyden in speaking out against the proposed move. To see who would benefit from the eliminating the estate tax, click [here](. ([The Hill]( Trump the Traveling Salesman: President Trump plans to visit as many as 13 states over the next seven weeks to pitch the American public on tax reform. The president's travel list includes Florida, Indiana, Michigan, Montana, Ohio and Pennsylvania — states he won in 2016 that also just happen to have a Democratic senator up for re-election next year. The planned roadshow is "vastly different" than Trump's level of engagement on health care reform, one tax reform advocate says. ([Bloomberg]( Why Congress Can’t Get Things Done The question just keeps popping up: What can Congress [get done]( this year? With a long to-do list and a relatively short list of legislative accomplishments this year, lawmakers are under pressure and public approval ratings for Congress remain [in the tank](. Senate Majority Leader Mitch McConnell recently dismissed the Senate’s failure to repeal Obamacare and the challenges his party has faced in power as simply the result of our governing process. “Well, welcome to the democratic process,” he said. But there may be more to it than partisan politics, as a new [blog post]( from the Brookings Institution suggests. “Congress may not be working well because it does not currently have the capacity to work well,” one recent report concluded. [Find out why here.]( What We’re Reading - [Pelosi Not Endorsing Sanders' Single-Payer Bill]( – Politico - [Senate Confirms Kevin Hassett as Trump's Top Economic Adviser]( – Washington Examiner - [What the US Can Do About Puerto Rico's Fiscal Crisis]( – Brookings - [Trump Eliminating Debt Limit Would Be Like a 'Nixon to China']( – Bruce Bartlett, USA Today - [Republicans' Tax-Cut Myth Is About to Crumble]( – Jennifer Rubin, Washington Post - [Taxes, Immigration Bigger Tests for Ryan Speakership Than Fiscal Deal]( – Roll Call - [Jamie Dimon: 'If We Did Things Right, We'd Be Growing at 3 Percent']( – CNBC - [US Is Giving Up on Public Schools. That's a Mistake]( – The Atlantic - [World’s Largest Car Market Turns to Electric Vehicles]( – Oil Price - [A New Way to Learn Economics]( – John Cassidy, The New Yorker - [$2 Trillion Man? Market Value Added Since Trump's Win Passes Milestone]( – CNBC - [Why Apple Will Easily Get Away With Selling a $1,000 iPhone]( – April Glaser, Slate - [US Median Income Rose to an All-Time High in 2016]( – Reuters - [Lawmakers Push Again to Mandate Mobile-Friendly Federal Websites]( – Nextgov - [Kentucky's Pension Troubles Indicate Where Much of the Country Is Headed]( – City Journal Copyright © 2017 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book]( Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](